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Private car loans provide financing for the sale of a car between individuals that often come with higher interest rates compared to buying from a dealer.
Average Auto Loan Rate For Excellent Credit
Written by: Daniel Robinson, Written by: Daniel Robinson Author Daniel is the Group Editor of Guides and has written for numerous automotive news websites and marketing agencies across the US, UK, and Australia, Specializing in auto finance and car maintenance topics. Daniel is the group’s authority on auto insurance, loans, warranty options, auto services and more.
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Edited by: Rashawn Mitchner, Edited by: Rashawn Mitchner Managing Editor Rashawn Mitchner is a Guides team editor with more than 10 years of experience covering personal finance and insurance topics.
While you can find a great deal on a car through a private sale, if you want to finance your purchase, you’ll need to find a lender that offers private equity loans. We at the Guides Group will explore what private car loans are, where you can find them and what you should know before financing your car with one.
We’ll also take an in-depth look at the market to see which lenders provide auto loans for private party sales – and which ones offer the best auto loan rates and services.
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Auto Loan Interest Rates By Credit Score (oct 2023)
All APR figures were last updated on 7/14/2023 – please check the partner site for the latest details. The rate may vary depending on credit rating, credit history and loan term.
The Guides Group is committed to providing reliable information to help you make the best possible financial decision for your vehicle. Because customers rely on us to provide accurate and complete information, we created a comprehensive rating system to develop our rankings of the best auto loan companies. We collect data on dozens of loan providers to rank companies on a variety of ranking factors. After 300 hours of research, the final result is an overall rating for each manufacturer, with the companies that received the most points at the top of the list.
Our team found that AutoPay, PenFed Credit Union, myAutoloan, and Digital Federal Credit Union currently offer the best private auto loans. The following sections feature key details about our top private auto loan lenders. Remember that the lowest annual percentage rates (APRs) shown here are reserved for borrowers with excellent credit.
AutoPay offers competitive rates and a minimum credit score to make buying a car from a private party easy. We gave AutoPay the Best Average Auto Loan Award for these reasons and because it has no application fees or penalties for pre-arranged loans. AutoPay also allows borrowers to get short-term loans that can be paid off quickly.
Best Auto Loan Rates Of October 2023
Pros Offers pre-qualification with flexible credit Low APR rates for borrowers with good credit No application fees or late payment penalties Offers asset protection guarantee (GAP)
PenFed Credit Union offers competitive rates for both new and used vehicles. You have to be a member to get access to special deals like cash back promotions, but joining PenFed is easy. The credit union has a slightly higher minimum credit score for car loans than other lenders at 650, but it also features a lower minimum loan amount.
PenFed receives strong customer feedback on sites such as Trustpilot, with positive reviews focusing on its application improvement process.
Private auto loans from myAutoloan start at 6.18% APR, with a fast and free application process. The company allows you to compare four loan offers in a few minutes and has a low credit score requirement that allows you to find bad credit car loans. We like the flexibility in both loan amounts and terms of myAutoloan features.
Car Loan Rates
Pros Many types of auto financing Compare four offers online in minutes on our online car payment calculator and credit calculator
Digital Federal Credit Union features more flexible loan amounts and terms than most lenders, and it’s easy to join. The company also offers 24-hour customer service, special programs for first-time car buyers, rate discounts for electronic payments and instant loan approval for most borrowers. Positive customer reviews for the credit union mention its easy and quick application process.
Private auto loans allow you to purchase a vehicle from a private seller instead of a dealer. A car dealership has a license to operate, which makes it more reliable than an individual in the eyes of a lender.
Like standard car loans, private equity loans are usually secured. This means that they are backed by collateral – in this case, the car itself. With a secured car loan, the lender is the borrower and owns the vehicle’s title until you pay off your loan.
Ways To Lower My Car Loan Interest Rate?
For private equity loans, lenders may charge higher interest rates or have different requirements for borrowers and vehicles. For example, you may need to carry gap insurance or make a larger down payment.
Although private equity loans differ from traditional car loans in some ways, the approval process is essentially the same.
The first step to qualifying for a private car loan is knowing how much you can borrow. In general, we recommend that your monthly auto loan payment be no more than 10% to 15% of your take-home pay. The total monthly expenses for your vehicle, including insurance, should not exceed 20% of your monthly income.
Using an online car loan calculator is a great way to get an estimate of what’s within your budget and what your monthly payments might look like. Auto loan calculators ask for information as follows:
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Once you determine how much a car you can afford, you can start shopping for a car that is within your budget. Websites like Craigslist, eBay and Facebook Marketplace are all good places to start your search.
Note that lenders have restrictions on what vehicles they will and will not finance. Typically, these restrictions include:
When you find the car you want, it’s time to apply for financing. Applying for a private marketing auto loan requires a hard check on your credit. However, multiple hard checks within a short period of time count as an inquiry, so comparing lenders won’t hurt your credit more than using just one.
Most lenders let you apply for an auto loan online. You will need the vehicle’s VIN, along with personal information such as your Social Security number, employment details and financial information.
Driving Into Debt
Compare loan offers to see which lender has the best financing options for you. The APR you find is one of the most important factors to consider, but you should also look at things like whether the loan comes with a prepayment penalty and what the fee is for late car payments.
In our 2023 consumer survey, 18% of the 2,000 respondents got their auto loans from Bank of America. Our research shows that banks tend to be the most popular source for auto loans.
The rates lenders offer borrowers vary depending on a number of factors. Here are the most important:
Through our research, we found the initial rates for private equity loans to be between 4.49% and 6.18%. However, the rates you will receive will depend on many factors including your credit score, the length of the loan term, and the type of vehicle you are financing. Below you can compare auto loan interest rates by credit score to get an idea of what your rates might be.
What Minimum Credit Score Do You Need To Buy A Car?
Although private car loans typically have higher interest rates than standard used car loans, there are some advantages to buying a car through a private sale.
For starters, you can get a better deal. Car dealers have many higher prices, which are usually built into the prices of the cars they sell. Also, an individual can quickly sell their car or no longer need it. In any case, the purchase price at a private sale can make up for the difference in interest rates.
Another advantage of private equity marketing is that you don’t have to go through the high-pressure salesperson experience. Because the process is designed to wear you down and sell you as
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